BACE1 is a type I transmembrane aspartyl protease which is essential for cleaving amyloid precursor protein (APP) at the -site. Only after this initial cleavage does - secretase further process the released APP C-terminal fragment to excise -amyloid peptide (A). While inhibiting BACE1 activity will reduce BACE1 processing of APP and will thus reduce the release of A, this inhibition will also lead to decrease cleavage of another BACE1 substrate, neuregulin-1 (Nrg1), and will reduce its signaling activity, which regulates various central nervous system functions such as myelination, synaptic plasticity and astrogenesis. We have demonstrated that genetic deletion of BACE1 causes hypomyelination, perhaps via reduced Nrg1 signaling. BACE1-null mice also exhibit schizophrenia-like behaviors, epileptic seizures and neurodegeneration, indicating that BACE1 plays a critical role in many brain functions. In this proposal, we will specifically investigate the contribution of Nrg1 signaling to the observed phenotypes because many of these neurological dysfunctions exhibited in BACE1-null mice are potentially related to alterations in the Nrg1/ErbB signaling pathway. We will test our central hypothesis that reduced BACE1-dependent Nrg1 signaling activity contributes to the observed multiple neurological dysfunctions in BACE1-null mice. Specifically, we will answer important questions as to whether elevated Nrg1 signaling activity will ameliorate or exacerbate BACE1-null phenotypes through examining BACE1-null mice engineered to express BACE1-cleaved Nrg1 N-terminal fragment and whether knock-in mice with disrupted cleavage in Nrg1 will produce phenotypes mimicking BACE1-null mice. Results from this study will not only resolve many ambiguous questions related to BACE1 and Nrg1 functions, but will also provide important guidance as to whether enhancing Nrg1 signaling activity will reverse or ameliorate potential side effects associated with long-term significant inhibition of BACE1 in AD patients.